Graphene Nanochem agrees debt restructuring plan

AIM-listed Graphene NanoChem has agreed a debt restructuring plan with its Malaysian lenders, including selling off some non-core business and exiting from low-margin operations.

Shares in the oilfield chemicals and water solutions company were up 26% to 12.25p on Monday morning as it said Malaysia Debt Ventures had agreed to a two-year repayment moratorium on its circa £16m short-term debt, with the maturity date pushed back from November 2015 to the end of 2021 at an interest rate of 8%.

The company's has also agreed with its banks that it will pay off its remaining £12m, long-term, secured debt by selling off non-core assets such as its fuel additive assets and the palm oil refinery.

This will leave Graphene NanoChem focused on its oilfield chemicals and water solutions businesses, in which management have been encouraged by perceived growth opportunities and increasing market traction, following January's first commercial order for its Confi-Gel additive into the oil and gas sector through its Scomi Joint Venture and the recent launch of its enhanced water treatment solution platform.

Chief executive Jespal Deol said the debt restructuring transactions, once completed, should provide the company with enough capital to execute the next phase of its stated growth plan.

"The board has endeavoured that the agreements reached will deliver the best available outcome for the business and for shareholders. We look forward to continuing to work alongside Malaysia Debt Ventures, a relationship which has proved to be extremely valuable and productive."

Directors pledged to remain focused on preserving and enhancing its cash position, adding that they continue to evaluate financing options, including the possible raising of new debt finance and the raising of additional funds from the capital markets.

"After a difficult year, the business will become right sized, leaner and well positioned to capitalize upon future prospects in the two large markets in which we operate."